Asia residue fuel market - Key market indicators this week

Singapore — Fuel oil traders expect an increase in the volume of low sulfur fuel oil arriving in Singapore in September from the month before to further pressure Asian LSFO margins in the coming week after testing three-months lows at the close of trade on Aug. 28, traders said Aug. 31.

Low sulfur bunker demand was lower in the week ended Aug. 28 than in previous weeks, while high sulfur bunker demand was stable over the same period, traders said.

MARINE FUEL 0.5% SULFUR

** Discussions for the Singapore Marine Fuel 0.5% September/October timespread opened Aug. 31 at minus $2.50/mt, stable from the Aug. 28 assessment, trader indications and ICE data showed.

** Traders estimate the volume of LSFO arriving in Singapore in September at 2.5 million-3 million mt, more than the 2 million-2.5 million mt estimated for August. The expectation of rising supply saw the Singapore marine fuel 0.5% to Singapore 380 CST high sulfur fuel oil spread weaken to a three-month low of $55.36/mt Aug. 28.

** Demand recovery is expected to support bunker differentials across North Asian ports in coming weeks with the exception of Hong Kong, which has seen a steep drop in demand since a mandatory 14-day quarantine rule was imposed on all cargo ships, including those on bunker-only calls, in late July.

** The Hong Kong delivered marine fuel 0.5S% differential to FOB Singapore 10 ppm gasoil cargo assessments fell 47.2% from Aug. 3 to minus $33.35/mt on Aug. 28, S&P Global Platts data showed.

** The Japan bunker fuel market is expected to remain supported by refineries stockpiling as they enter maintenance season, and with demand having rebounded from the lows seen over May-June.

** Demonstrating this strength, the Tokyo Bay delivered marine fuel 0.5%S differential to FOB Singapore 10 ppm gasoil cargo assessment rose $6.49/mt week on week to minus $17.35/mt Aug. 28, Platts data showed.

HIGH SULFUR FUEL OIL

** Discussions for the Singapore 380 CST HSFO September/October timespread widened to $2/mt in mid-morning trade Aug. 31 from the assessment at $1.50/mt on Aug. 28, brokers said.

** The Singapore 380 CST HSFO market is expected to weaken as Saudi Arabia has reduced purchases from Singapore for September delivery, according to traders. Saudi Arabia's peak demand season typically runs June to early September.

** The cash differential for 380 CST HSFO fell to minus 56 cents/mt Aug. 27 before edging up to 46 cents/mt on Aug. 28, but remaining well below the plus $1.70/mt averaged over the previous week of Aug. 17-21, Platts data showed.

** The fall in 380 CST prices in the week ended Aug. 28 was not matched by a fall in 180 CST, which was supported by demand from Bangladesh and Pakistan.

** Bangladesh is expected to continuue buying 180 CST HSFO until end September to meet power demand, while Pakistan has issued a tender seeking 70,000 mt of 180 CST HSFO for October delivery.

** The cash differential for 180 CST HSFO held steady at $3.11/mt Aug. 28, wider than 46 cents/mt for 380 CST.